Precision Snares Grey Wolf in Strategic Merger for Both Companies

Precision Drilling Trust and Grey Wolf, Inc. have announced that their Board of Trustees and Board of Directors, respectively, unanimously approved a definitive merger agreement pursuant to which Precision will acquire Grey Wolf.

The combination of Precision and Grey Wolf will have land drilling operations in virtually every conventional and unconventional oil and gas basin in the lower 48 United States and Canada with an emerging presence in Mexico. The combination of Grey Wolf's deep drilling capabilities and Precision's high performance systems and technology provides a foundation for immediate international expansion to pursue global oil drilling opportunities.

Under the terms of the agreement, Grey Wolf shareholders will receive US $5.00 in cash and 0.1883 newly-issued Precision trust units for each Grey Wolf common share on a fully-diluted basis, for aggregate consideration of US $1.12 billion in cash and 42.0 million Units. Grey Wolf shareholders will be able to elect to receive cash or Units, subject to pro-ration.

The consideration represents approximately a 4.5% increase in the aggregate number of Units offered to Grey Wolf shareholders since Precision's last public announcement of its intention to acquire Grey Wolf.

Grey Wolf's Board of Directors believes this consideration represents a substantial premium over an 'unaffected' Grey Wolf stock price without the influence of Precision's previous public announcements regarding its desire to acquire Grey Wolf.

The transaction is expected to be highly accretive to Precision's cash flow per Unit.

Existing Grey Wolf shareholders will own approximately 25% of the combined entity and three of the current Grey Wolf directors will be added to the Board of Directors of Precision Drilling Corporation, the administrator of Precision Drilling Trust, at closing.

Financing is not a condition to closing of the merger. Precision has committed financing for the cash portion of the consideration and sufficient funding to continue its strategic organic growth plan.

The combination is expected to increase value for Grey Wolf's shareholders by enabling the combined entity to capitalize more effectively on strong industry fundamentals in North America. Grey Wolf's highly experienced people, turnkey drilling capability and its technologically advanced rigs will enhance Precision’s ability to execute its strategy to expand its high performance, high value drilling business in the United States and creates a solid platform for international expansion. In addition to drilling, Precision's Production and Completion segment in Canada provides Grey Wolf shareholders an investment in new business lines associated with the full life cycle of oil and natural gas wells including service rigs, rental equipment and well snubbing.

The transaction will enhance Precision's leadership position in the North American oil field services sector and represents an important milestone in Precision’s long-term strategy for expansion beyond Canada. The combined company will continue to focus on providing a safe work environment for all its employees and will benefit through the sharing of best practices. The combination also provides synergies to secure greater cost advantage through the adoption of common operational support systems including procurement, maintenance, rig manufacturing and enterprise wide information systems.

The transaction will establish scale for Precision as one of the largest land drillers in North America with a combined fleet of 371 drilling rigs. The combined company will also provide 229 service rigs, camp and catering, procurement, rig manufacturing and repair, snubbing, rentals, wastewater treatment and a turnkey drilling business. On a pro-forma basis for the 12 months ended June 30, 2008, combined revenue was US $1.8 billion.

Grey Wolf reached agreement with Precision following its previously announced review of strategic alternatives for enhancing shareholder value. This review included an update to Grey Wolf's existing strategic plan and, ultimately, active solicitation of interest among a broad range of potential strategic and financial buyers for Grey Wolf, with the assistance of its independent financial advisors, UBS Investment Bank.

Commenting on the transaction, Kevin Neveu, CEO of Precision Drilling Corporation, stated, "The merger with Grey Wolf is a perfect strategic fit for both companies. Grey Wolf's customer base, experienced employees and rig fleet will be enhanced by Precision's high performance systems and Super Series rig technology. Together we can deliver high value services that will provide significant value to our customers, employees and securityholders. We are well positioned to be the premier provider of drilling services to the emerging unconventional gas and oil plays throughout North America, from the Haynesville shale in Louisiana to the Horn River development in north-eastern British Columbia.

Further, the combination will immediately strengthen the platform for Precision's global drilling strategy with increased scale, deep drilling rigs and great people." Neveu added, "We will look forward to welcoming all Grey Wolf employees to the Precision family."

Thomas P. Richards, Chairman, President and CEO of Grey Wolf, said, "Grey Wolf’s Board of Directors believes this improved offer from Precision is in the best interests of Grey Wolf shareholders, customers, and employees and we are pleased we have been able to reach this agreement. Grey Wolf shareholders will be able to receive immediate value for a portion of their shares through the cash component of the merger consideration and will have the opportunity to participate in the upside as securityholders in a combined company whose scale, financial strength and strategic advantages position it well for future growth. Our shareholders should know that the Grey Wolf Board conducted a rigorous evaluation of alternatives and we believe the Precision merger best serves their interests.

"The Precision merger recognizes the potential inherent in Grey Wolf's asset base. Our two drilling companies have also built a long-standing reputation with customers for safety, reliability and quality in their drilling operations. The technical capabilities of our combined rig fleets make a formidable asset base and will expand service to our loyal US customers. For the employees of Grey Wolf, this provides an historic opportunity to participate and lead in the development of a global drilling company with leading technology."

Under the terms of the Agreement, Grey Wolf’s shareholders will have the ability to elect to receive cash or Units subject to pro-ration, where the maximum amount of cash to be paid by Precision will be approximately US $1.12 billion, and the maximum number of Units will be approximately 42.0 million. These maximums take into account the conversion of Grey Wolf’s convertible debt securities and stock options, totaling approximately 223 million fully diluted Grey Wolf shares. These maximum aggregate amounts translate to US $5.00 in cash and 0.1883 of a Unit for each share of Grey Wolf stock.

Precision has received commitments from Deutsche Bank Securities, Royal Bank of Canada, HSBC Bank and The Toronto Dominion Bank to finance the cash portion of the transaction.

Upon completion of the transaction, Precision will remain headquartered in Calgary, Alberta with its United States operations headquartered in Houston, Texas. Precision will maintain Grey Wolf’s principal offices and facilities and will offer attractive opportunities for all of Grey Wolf’s employees to have continued roles with Precision. It is anticipated that the Grey Wolf name will continue to be used for a period of time.

Precision's contract drilling operations leadership team in the United States will be a combination from both companies' management teams and led by David Crowley, currently Executive Vice President and Chief Operating Officer of Grey Wolf, who will be President of Precision’s US operations.

Completion of the transaction is subject to Grey Wolf shareholder and customary regulatory approvals. The transaction is not subject to approval by Precision Unitholders. The Boards and management teams of both Precision and Grey Wolf will work jointly and promptly to prepare the necessary regulatory filings. It is anticipated that the proxy statement will be mailed to Grey Wolf shareholders by the end of the third quarter with the special meeting of shareholders to be held before the end of 2008.